SEK32.1bn to drop into funds on 13 December

6.2 million long-term savers will receive SEK32.1bn (€3.5bn) on 13 December via the Swedish pension system to put into funds of their choice available on the PPM platform.

The Swedish Pensions Agency (Pensionsmyndigheten) said the figure represents money paid into the country’s Premium Pension system via salaries in 2010, and subsequent interest, which is now being apportioned between the pension savings accounts of 6.2 million people.

“The money is placed in funds according to the distribution last selected by the investor. The average sum per pension investor is is about SEK4,500 (€491), and at most the deposit will be SEK9,582 (€1,046). These figures exclude interest. The deposit will be reported in the Orange envelope in January for pensioners, and in February-March for pension investors,” said Mats Öberg, head of fund and finance at the Agency.

The total market value of Premium Pension savings were SEK363bn (€39.6bn) as of 31 October.

Trading in affected funds will begin on 13 December. As a result, fund switches that take place close to this date will be executed with a delay. Fund switches that take place after midnight on 8 December will be executed at the earliest on 14 December, the Agency said.

Broader effects

Although the SEK32.1bn sum is focused on funds offered for pension savers, many of the funds available on the PPM platform are also available elsewhere to investors who are looking to invest for other reasons.This means that issues affecting supply of and demand for funds on the platform have wider ramifications in the Swedish market funds universe.

This link has previously been highlighted by InvestmentEurope, including the challenges thrown up by mass switching on the platform.

The Swedish Investment Fund Association, which represents managers, said on 16 November that it welcomed the decision by the Pensions Agency to publish a guide to selecting funds, which it linked to its own publication Fondkollen, which also seeks to educate fund investors.

The Association says that the proportion of assets under management in funds linked to pensions savings has increased from 25% in 2000 to 50% currently. Besides PPM, funds are also relied on by company pension schemes and individual pension plans.